Fintechs | Consumers want more from banks as societal change reshapes category
Fintechs respond by making people feel better off, in control, understood
Partner, Brand Strategy
Kantar, Consulting Division
Many forces are shaping the future of banking. These include government intervention to increase competition, disruptors challenging long-standing business models, and advances in technology that are changing the interface and customer experience.
These forces are fundamental shifts in the category and they are raising people’s expectations. They are also set against wider societal changes, such as: the coming of age of the Centennial generation and the increasing economic power of the Millennials; the recognition that many brands and industries continue to underpay their female employees and underserve their female customers; and last, but no means least, the aging population and the concern about levels of saving and pension provision in our old age.
Despite these changes, the huge scale and increasingly confident marketing of the major consumer banking players means than many of them rank in the BrandZ™ Global Top 100. It’s notable, however, that fintech brands are appearing in the ranks of valuable brands. Specific functional and emotional consumer propositions have propelled both Moneysupermarket and ComparetheMarket into the BrandZ™ UK Top 75, for example.
In addition, the fintech consumer brands are leading in customer experience and in the cultural narrative. While their customer base is relatively small and often focused on day-to-day banking rather than bigger, life-event-driven financial services, their brands are often loved by their users. And crucially, their absolute rate of customer acquisition points to future risks for the big brands.
The UK fintech Revolut, rumored to be planning a mega funding round, has over three million customers. Some estimates have Tide, a UK online business bank, accounting for almost 10 percent of UK business banking accounts opened last year. And Marcus, the new online savings bank of Goldman Sachs, racked up over 100,000 customers in its first 40 days in the UK. In the US, Marcus reportedly had $22 billion deposits within 18 months of launch.
So, what do we believe is driving the growth of these fintechs?
- Emotion People want more than products. As well as specific functional benefits, people want an emotional payoff. They want to feel smart, in control, and more confident or more knowledgeable as a result of interacting with financial services. Every brand owner increasingly needs to think in terms of being in the self-esteem business.
- Creativity Pure online brands are small but fast growing and influential. Many have built their entire business model on consumer connectivity by solving real functional and emotional tensions. And while they are small in terms of brand value, the BrandZ™ data show that established online brands, such as Comparethemarket, are seen by consumers as being far more creative and innovative than brands with a long history. Consumers also believe these brands provide a better experience. This leads to stronger feelings of love for these brands
- Purpose Purpose must be more than a statement. It needs to run right through the brand and include its behaviors, products, and experiences. Every aspect of the way that a brand expresses itself at every touchpoint needs to evolve with culture. All traditional banks say that they want people to be better off, prosper or thrive, but the start-ups are winning the battle for attention. They are winning, not because they are saying things, but because they are consistently doing things that make people feel better off, more in control, better understood, more communicated with as equals.
- Experience Experience is the key battleground. Transparency, honesty, humanity, and delivery have to be present in every consumer or user experience, no matter the channel. The context for experience isn’t other financial services brands—it’s great customer experience in the omnichannel age. So, Amazon’s same-day delivery service means customers’ expectations are that all the financial essentials (like payments, credit checks, and debit card delivery) can be processed and delivered with the same transparency and speed.
- Innovation Brands must innovate and keep innovating. Banking, auto, hospitality and consumer product sectors are all facing challenges to their business models and ever-higher demands from discerning consumers. Barriers to entry are falling all the time and those that aren’t disruptors themselves will be disrupted. Brands need to accept that what has sustained them in the past, is unlikely to keep them growing in the future. They must be imaginative in rethinking what their role in consumers’ lives. Are they an issuer of check books and debit cards, or a service that helps someone secure their family’s future?